Toshiba PC Division Facing Grim Future As Merger Talks Collapse

It really is The collapse of talks between scandal plagued PC maker Toshiba, Fujitsu and Vaio could see further layoffs at Toshiba Australia.

Late last year the local subsidiary of Toshiba Australia, started laying off staff, at the same time they pulled out of the consumer PC market to concentrate on the B2B and education markets. Now speculation is rife that Toshiba will pull out of the PC market globally as the low margin industry witnesses double digit declines.

The Japanese Company has been plagued by scandal with several executives facing charges following an investigation into the Companies accounts.

The only saviour could be a separate merger between Fujitsu who were last year forced to take over the Fujitsu PC business in Australia and Toshiba, after Japan Industrial Partners a fund that acquired a controlling share in Vaio Corporation who in turn took over Sony’s PC business walked on the talks leaving Fujitsu and Toshiba to sort out a possible deal which some insiders claim is unlikely.

The Fujitsu PC business was so poorly run in Australia that at one stage last year Fujitsu Australia services division was forced to sell 5,000 HP notebooks to one client because the Fujitsu PC’s could not deliver the security software required for the contract.

The first round of talks kicked off last year in Japan after an accounting scandal at Toshiba, which said it had overstated profits for years. The 140-year-old electronics firm fell into deep financial trouble, and Chief Executive Masashi Muromachi started shedding businesses to shore up its balance sheet and restore profitability.

Although Toshiba was a pioneer in notebook computers, its unit selling Dynabook PCs has been losing money. Mr. Muromachi earlier confirmed the talks about a combination and said it could help the companies get better terms from suppliers.

The Wall Street Journal claims that under one idea, Japan Industrial Partners would have taken a controlling stake in the combined company, but the sides couldn’t agree on terms according to sources. They said Vaio walked away because it felt the negotiations were going nowhere.

Mr. Muromachi hinted at the difficulties last month, saying he hoped to conclude the matter by June after earlier setting a March deadline. A Toshiba spokeswoman said Thursday that the company is considering various options for its PC unit, including a consolidation with others, but nothing has been decided.

In March, Toshiba agreed to sell its medical-equipment unit to Canon in a deal valued at US$6.3 billion. One-person familiar with the matter said the larger-than-expected price tag took the pressure off Toshiba to reach a PC deal quickly.

Toshiba has said it expects to report a net loss of ¥710 billion in the year ended March 2016, although the amount may be smaller thanks to the medical deal.

Toshiba’s global PC share last year was 4.1%, Fujitsu’s was 1.2% and Vaio’s was 1.1%. Even if they combined, the three would be far short of Lenovo Group Ltd.’s 17.4%.

David Richards has been writing about technology for more than 30 years. A former Fleet Street, Journalist He wrote the Award Winning Series on the Federated Ships Painters + Dockers Union for the Bulletin that led to a Royal Commission. He is also a Logie Winner. for Outstanding Contribution To TV Journalism with a story called The Werribee Affair. In 1997, he built the largest Australian technology media Company and prior to that the third largest PR Company that became the foundation Company for Ogilvy PR. Today he writes about technology and the impact on both business and consumers.